What’s the original cause of Nigeria fuel scarcity
The fuel scarcity in Nigeria is a result of hoarding by petrol stations in attempt to drive prices up.
Nigeria has more than enough fuel to meet its 550,000 barrels per day demand. However, selling at 145 Naira per liter is becoming unprofitable because global crude oil price is trending upwards.
You might ask how come Nigerian filling station didn’t hoard petrol when crude oil was at $110 per barrel?
Well, the government subsidized petrol product. Let me explain, Nigerian exports 1.8 million barrels day at $110 per barrel and imports 550,000 at a loss. Since petrol has a multiplier effect the country’s economy(transportation, power, etc), the government has to subsidize it to keep the cost of goods low. However, when crude prices fell to $25/barrel in 2015, petrol prices fell, Nigeria removed the fuel subsidy and made it illegal to sell more than 145 Naira per liter.
Now, the outlook for global crude oil prices in 2018 is positive. However, there isn’t any fuel subsidy and petrol benchmark is still at 145 Naira per liter. Filling stations are anticipating an increase of the benchmark or increase in fuel subsidy, so they are hoarding their fuel to profit later.
Good thing there is a fine of 20 million Naira for any filling station caught doing this. If you catch a filling station refusing to sell fuel, call the Department of Petrol Resources (DPR) at 234-1-2790000